IMF chief calls for expanded definition of “ vulnerable ”

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By Andrea Shalal

WASHINGTON, April 7 (Reuters) – The director of the International Monetary Fund said on Wednesday she would discuss with IMF members their intention to offer low-interest or interest-free financing to hard-hit middle-income countries by the pandemic, and not just to the poorest. countries.

Managing Director Kristalina Georgieva expressed concern about tourism-dependent countries and other middle-income countries that had weaker fundamentals and high debt levels, even before the pandemic, and generally supported adoption a broader definition of what makes a country “vulnerable”.

The IMF’s Poverty Reduction and Growth Trust Fund can currently only lend to the poorest countries, which limits the ability of higher-income developing countries to obtain low- or zero-interest loans in the country. IMF.

The United Nations and other agencies have urged the Group of 20 Major Economies to extend the freeze on official bilateral debt payments and a new common framework for dealing with debt to those countries, many of which have been hit hard by the pandemic and its economy. Fall.

G20 finance officials on Wednesday backed a $ 650 billion increase in the IMF’s emergency reserves, or special drawing rights, that richer IMF members can lend to the IMF’s PRGF to help poorer countries. poor.

Georgieva said the IMF expects to complete work on a formal SDR $ 650 billion allocation proposal by mid-June, and is also working on ways for IMF members to lend their reserves. to help poor countries.

She said it was “realistic” that members could access the expanded reserves by mid-August, but declined to estimate how many SDRs would likely be shared by richer countries.

While IMF members can already lend excess SDRs to the IMF’s PRGF facility, there is no formal IMF mechanism in place to facilitate lending to assist middle-income countries.

Georgieva said the issue was raised at Wednesday’s G20 meeting, noting a call from Mexico and Argentina for more debt relief for middle-income countries.

She said there were other ways to support middle-income countries, but that she would discuss with members the possibility of opening up concessional financing terms to them as well.

Georgieva said her personal view was that the international community should broaden its view of “vulnerability” beyond simple income levels to include climate shocks.

“The international community should look at other vulnerabilities, as we think about the appropriate ways to support developing countries, and this discussion will continue quite intensively over the coming months,” he said. she declared.

While Argentina and Mexico have warned of a possible looming debt crisis, the IMF chief said she did not expect a systemic debt crisis at this time, but that the IMF would remain vigilant.

(Reporting by Andrea Shalal; Editing by Chris Reese and Andrea Ricci)

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